Between custodial accounts, Roth IRAs for kids, 529 plans, and now proposed “Trump accounts,” parents have more ways than ever to save for their children. More choice sounds good — until tax rules start colliding.

The biggest mistakes in this area aren’t about picking the “wrong” account. They’re about misunderstanding how ownership, earned income, unearned income, and kiddie tax interact over time — especially as kids grow, file their own returns, and become eligible for Roth strategies.

Each of these accounts serves a different purpose — and misunderstanding how they interact with ownership rules and kiddie tax is where planning often goes sideways.

A custodial account (UTMA/UGMA) is a taxable account opened for a minor, managed by an adult custodian, but legally owned by the child. That ownership is why investment income can trigger kiddie tax rules — and why planning around timing, gains, and future conversions matters more than most families expect.

 “Trump accounts” are a newly proposed structure designed to encourage long-term savings for children by combining elements of custodial accounts and retirement-style tax treatment.

A 529 plan is a tax-advantaged savings account designed for education expenses, where contributions grow tax-deferred, and withdrawals are tax-free when used for qualified education costs.

A Roth IRA for a child is a retirement account funded with earned income, where contributions are made after tax, growth is tax-free, and qualified withdrawals in retirement are not taxed. A Traditional IRA for a child is similar, but contributions may be pre-tax, growth is tax-deferred, and withdrawals are taxed as ordinary income.

Our goal here is to outline a practical summary of the nuances that tend to get missed, specifically with custodial accounts and Trump Accounts.

 

Kids Can (and Often Should) Have Multiple Account Types

If a child has earned income, they are not limited to choosing either a taxable account or an IRA.

They can have both:

• A taxable account for flexibility and long‑term capital gains treatment, also known as a custodial account or UTMA/UGMA.
• A Traditional IRA or Roth IRA, funded up to their earned income limit (A Roth IRA is almost always preferred).

Key takeaway:

If there is earned income, do both when appropriate – different buckets, different tax advantages.

This flexibility matters later — especially when navigating kiddie tax thresholds and future Roth strategies.

 

Stay On Top of Kiddie Tax Rules for UTMAs (2026 Thresholds)

Custodial (UTMA/UGMA) accounts often look simple — until unearned income shows up.

For 2026, the kiddie tax works in three buckets:

• First $1,350 of unearned income → tax‑free.
• Next $1,350 → taxed at the child’s marginal rate.
• Anything above $2,700 → taxed at the parents’ marginal rate.

This is where planning becomes proactive instead of reactive.

A Planning Question Worth Asking

Should you be resetting the cost basis in existing UTMAs?

Strategic realization of gains (within the first two buckets) can reduce future tax drag — especially before income pushes the child into the parents’ bracket.

Ignoring this often means paying unnecessarily high taxes later.

 

Trump Accounts: Qualifying for the $1,000 Pilot Contribution

A common point of confusion:

• The $1,000 pilot contribution requires a separate election form (Form 4547) and only applies to children born between 2025 – 2028.
• It receives pre‑tax treatment.
• It does not count toward the annual $5,000 contribution limit.

That makes it powerful — but only if you complete the paperwork correctly.

Miss the election, and you lose the intended benefit.

 

Trump Accounts: The Importance of Form 8606 (File It Forever)

Form 8606 is not optional administrative fluff. Trump Accounts (TA) can contain a mix of pre-tax and after-tax dollars.

• Direct contributions, which are non-deductible, are treated as after-tax dollars (i.e., basis) within the TA.
• Employer contributions, qualified general contributions (donations, e.g., Dell Foundation), and the $1,000 pilot program contribution – all of which are excluded from gross income when received – are pre-tax.
• Additionally, any growth or investment income beyond the initial contributions, which is tax-deferred until withdrawal, is pre-tax within the account.

Form 8606 is the only permanent record of after‑tax basis in an IRA. Said another way, this is maintained so that your direct contributions aren’t taxed twice.

Why this matters even more for kids:

• Records get lost over time.
• Parents file returns initially, but kids eventually file on their own.
• The IRS does not reliably track this for you.

Best practice:

• File Form 8606 every single year it applies
• Keep copies indefinitely — even in years with no contributions

Think of it as a legal proof document, not a tax form.

 

Trump Accounts: The Roth Conversion Assumption Trap

A common assumption:

“We’ll just convert it to Roth when our child turns 18 and his/her tax rate is low.”

That logic breaks down under kiddie tax rules.

Why This Is Risky

• A Roth conversion is treated as unearned income.
• Unearned income is subject to the kiddie tax.
• Large conversions can be taxed at the parents’ marginal rate.

This often means:

• Waiting until the parent no longer claims their child on their tax return.
• Using partial conversions instead of all‑at‑once moves.
• Timing conversions for years when the child has no earned income, allowing more income to fall into the lower kiddie tax buckets (and likely utilizing the partial conversion strategy above).

Roth conversions are not automatically “cheap” just because the account owner is young.

 

Trump Accounts: How to Withhold on a Roth Conversion

Another easy‑to‑miss rule:

• If you withhold taxes on a Roth conversion, the amount withheld is treated as a distribution.
• For a minor, that distribution is typically subject to a 10% penalty.

Best practice:

Taxes on a conversion should come from outside funds, not from the IRA itself.

This rule applies to adults, too — but it’s especially damaging when balances are small and compounding time is long.

 

Trump Accounts: A Hidden Financial Aid Advantage

One surprising upside:

• A Trump Account is structured as a retirement account. As a result, financial aid calculations exclude it!

That can materially improve aid eligibility compared to assets counted under student ownership formulas.

Account structure matters — not just for taxes, but for future optionality.

 

Final Thoughts

When it comes to kids and money, the biggest mistakes aren’t about being too aggressive.

They’re assumptive:

• Assuming Roth conversions are always low‑tax.
• Assuming the IRS keeps track of the basis.
• Assuming custodial accounts are “simple.”

Good planning here isn’t about optimization for one year.

It’s about keeping future doors open — and avoiding rules that quietly close them.

If you’re setting up or managing accounts for kids, this is one area where getting the details right early pays off for decades. Connect with us today to discuss how we can optimize your kids’ investment strategy.

Please consult with your financial advisor and/or tax professional to determine the suitability of these strategies. All views, expressions, and opinions in this communication are subject to change. This communication is not an offer or solicitation to buy, hold, or sell any financial instrument or investment advisory services.

If you’re 45 and paying close attention to your money, you’re probably doing what most conscientious investors do: You check your accounts. You read the headlines. You notice what’s working and what isn’t. And when something feels off, you start tweaking your investments.

That instinct makes sense. It also quietly works against you.

Activity Feels Responsible (But Rarely Is)

Constant tweaking feels like good stewardship. After all, ignoring your finances sounds reckless.

But markets don’t reward vigilance. They reward discipline.

Most portfolio changes are reactions to short-term noise—economic headlines, recent performance, or what everyone else seems to be doing. By the time you feel compelled to act, the information you’re responding to is already reflected in prices.

In other words, you’re usually late.

The Costs You Don’t See on a Statement

Yes, trading costs and taxes matter. But for most investors in their 40s, the bigger cost is behavioral.

• Selling because something feels wrong
• Buying because something looks obvious
• Changing course because discomfort shows up earlier than expected

None of these decisions feels reckless in the moment. They feel rational. Thoughtful, even.

Over time, they quietly erode results.

Strategy Requires Endurance, Not Precision

A real investment strategy is built with volatility baked in. If everything had to go smoothly for it to work, it wasn’t a strategy—it was a guess.

When you constantly adjust in response to short-term movements, you never allow the plan to do what it was designed to do. You reset expectations at the worst possible moments and rob compounding of the one thing it needs most: time.

Progress isn’t about avoiding every drawdown. It’s about staying aligned through them.

More Information ≠ Better Decisions

Access to real-time data has created a generation of hyper-aware investors—and a lot of unnecessary stress.

When every dip feels urgent, and every rally feels actionable, it becomes harder to distinguish signal from noise. The result is more movement, more second-guessing, and rarely better outcomes.

Sometimes the most disciplined move is choosing not to act.

When Change Is the Right Move

Being opinionated doesn’t mean being rigid.

Portfolio changes make sense when:

• Your goals change
• Your time horizon shifts
• Your risk tolerance genuinely evolves
• Your life gets more complex

Those are strategic inflection points—not emotional reactions.

The Bottom Line

Constantly tweaking your investments may feel proactive, but it often trades long-term progress for short-term relief.

If you’re doing the work—earning, saving, investing—you don’t need more activity. You need a plan you can stick with when sticking with it is uncomfortable.

That’s where real results come from.

If you find yourself second-guessing your investment decisions or maybe they’re taking up too much of your mental capacity, connect with us today to discuss how we can help based on your financial situation.

Please consult with your financial advisor and/or tax professional to determine the suitability of these strategies. All views, expressions, and opinions in this communication are subject to change. This communication is not an offer or solicitation to buy, hold, or sell any financial instrument or investment advisory services.

The IRS recently announced key contribution limit changes for 2026 for IRAs, Roth IRAs, employee-sponsored plans, and Health Savings Accounts (HSAs).  While the increased IRS contribution limits are helpful, they are largely incremental. They reflect cost-of-living adjustments rather than wholesale reform.

The broader opportunity still lies in your consistent contributions and in ensuring you’re using the available vehicles fully, rather than just hitting the new ceiling.  With that said, here’s a summary of key items to consider as you begin planning for the new year.

Key Takeaways

• Maximizing opportunities: If you are not already contributing up to the new limits (or planning to), now may be a good time to review your payroll elections or IRA contributions for the coming year. For example, bumping up an IRA contribution from $7,000 to $7,500 (if possible) or adjusting 401(k) deferrals toward the new $24,500 cap.
• Catch-up timing matters: For those age 50+, the higher catch-up limits (especially ages 60-63) provide extra room to accelerate savings. If you’re approaching that age range, consider how much you want to allocate to catch-up contributions.
• Plan sponsor/employer considerations: Employers and plan administrators will need to update plan documents, payroll systems, and participant communications to reflect the new limits and the new Roth-catch-up rule. If you’re an employee, check with your plan administrator or HR department to ensure your plan is aligned for 2026.
• Check employer plan eligibility: For example, the “super catch-up” (ages 60-63) may be optional for some employer plans. The Roth catch-up rule for high earners also depends on whether the plan offers a Roth option; if not, high earners may be restricted from making catch-up contributions.

Details of the IRS contribution limits and income thresholds for specific categories are outlined below for your reference.  As always, please consult a financial or tax advisor as appropriate for your individual situation.

IRAs and Roth IRAs

IRS Contribution Limits

• For 2026, the maximum annual contribution to a traditional IRA or a Roth IRA rises to $7,500, up from $7,000 in 2025.
• For individuals aged 50 or older, the catch-up contribution amount increases to $1,100, up from $1,000 in 2025.

Income phase-out ranges (for determining eligibility/deductibility)

• For traditional IRA deductibility (covered by a workplace plan):
  • Single filers: phase-out range is now $81,000 to $91,000 (up from $79,000 to $89,000).
  • Married filing jointly (and the contributor is covered by an employer-sponsored plan): $129,000 to $149,000 (up from $126,000 to $146,000).
• For Roth IRA contribution eligibility:
  • Single or head of household: phase-out range is now $153,000 to $168,000 (up from $150,000 to $165,000).
  • Married filing jointly: range is now $242,000 to $252,000 (up from $236,000 to $246,000).

Employer-Sponsored Plans

IRS contribution limits

• The employee elective deferral limit (for contributions to most 401(k) / 403(b) / 457(b) plans) is increased to $24,500 for 2026, up from $23,500 in 2025.

Catch-up contributions for those age 50+

• The standard catch-up contribution (age 50 and older) rises to $8,000 for 2026, up from $7,500 in 2025.
• For participants aged 60-63, the “super catch-up” limit remains $11,250 for 2026 (unchanged from 2025).
• Thus, for a 50+ participant (under 60), total possible contributions in 2026 could reach $32,500 (i.e., $24,500 + $8,000) under many plans.
• For participants aged 60-63, potentially up to $35,750 (i.e., $24,500 + $11,250).

Special rule for high-income earners (Roth catch-up)

Beginning January 1, 2026, a new rule under the SECURE 2.0 Act of 2022 requires that if a participant is age 50+ and had wages subject to Social Security (Box 3 on Form W-2) of more than $150,000 (for 2025 wages; the threshold is indexed) from that employer, then any catch-up contributions they make in 2026 must be designated as Roth (after-tax) contributions. As an employee, you may make pre-tax elective deferrals up to the standard limit ($24,500), but the catch-up portion must be in a Roth account.

• This means high-wage older workers need to confirm their plan offers a Roth option and understand the tax implications of making catch-ups as Roth.

SIMPLE plan limits

• For SIMPLE 401(k) or SIMPLE IRA plans, the IRS increased the limit for 2026 deferrals to $17,000 (from $16,500).
• The catch-up contribution for age 50+ in SIMPLE plans is $4,000 for 2026 (up from $3,500).

Health Savings Accounts (HSAs) & High-Deductible Health Plans (HDHPs)

HSA contribution limits

• For 2026, the HSA contribution limit is $4,400 for self-only coverage (up from $4,300 in 2025).
• For family coverage, the limit is $8,750 (up from $8,550).
• The catch-up contribution for those age 55 or older remains $1,000.

HDHP minimum deductibles and out-of-pocket limits

• Minimum annual deductible for self-only coverage: increases to $1,700 (from $1,650).
• For family coverage: minimum deductible increases to $3,400 (from $3,300).
• Maximum out-of-pocket (OOP) limit for self-only: $8,500 (up from $8,300).
• For family coverage: OOP limit rises to $17,000 (from $16,600).

The Bottom Line

The 2026 limit updates provide a modest but meaningful lift in tax-advantaged savings opportunities across multiple account types. For savers — particularly those in or approaching peak earning years — the higher limits and special rules (e.g., Roth catch-ups for high earners) underscore the importance of reviewing your savings strategy and tax planning in light of the changes.

If you need help maximizing your investment opportunities, connect with us today to discuss how we can best allocate your investments for your situation.

Please consult with your financial advisor and/or tax professional to determine the suitability of these strategies. All views, expressions, and opinions in this communication are subject to change. This communication is not an offer or solicitation to buy, hold, or sell any financial instrument or investment advisory services.

Gold prices jumped more than 60% this year, climbing above $4,300 per ounce. It’s no wonder people are asking, “What’s going on?” and “Is this time any different?” Let’s attempt to make sense of the recent gold rally and currency concerns. 

Some say it’s all about the “debasement trade.” The idea here is that governments may weaken their currencies by spending more than they collect in taxes and keeping interest rates low. When the dollar weakens, investors might consider buying assets like gold because they see it as holding its value better than cash.

While worries about government debt are real, history shows that predicting gold prices is hard. For long-term investors, the key question isn’t whether to own stocks, bonds, or gold, but how much of each to hold. This is especially important to consider in light of the current gold rally.

What Is Currency Debasement?

Currency debasement is an old concept that comes up every few years. Originally, it meant governments putting less precious metal in their coins, allowing them to make more coins from the same amount of metal, but each coin was worth less.

Today, most money is “fiat currency” – it has value because people trust the government that issues it, not because it’s backed by gold. Modern debasement concerns focus on whether governments will allow higher inflation (rising prices) and a weaker currency to make their debt easier to manage.

Right now, there’s mixed evidence about whether this is happening. Inflation measures are around 3% or lower, which is not extreme. Bond markets aren’t pricing in high inflation either. The 10-year Treasury yield is around 4%, and inflation expectations are only 2.3%. While the dollar has fallen about 10% this year, it’s still near its highest levels over the past 20 years.

How To Time A Gold Rally

Gold has had dramatic rallies before with mixed results, making it nearly impossible to time. In 1980, gold peaked above $800 per ounce but didn’t reach that level again until 2007. After the 2008 financial crisis, gold doubled between 2009 and 2011, hitting $1,900 per ounce, then fell back toward $1,000 over the next few years.

This chart shows gold’s performance compared to the S&P 500 stock index since 2007. While gold has had strong periods, stocks have done better over the this time period. This shows why it’s essential to think about all investments as part of a complete portfolio.

How Does Gold Compare To Other Investments This Year

Gold isn’t the only investment that’s performed well recently. Stocks (including the Magnificent 7 tech companies), international stocks, bonds, and cryptocurrencies have all contributed to portfolio returns this year. The chart shows that many types of investments have increased in value.

For many investors, gold is part of a broader commodities holding that also includes investments like silver, oil, and agricultural products. One challenge with gold is that, unlike stocks or bonds, it doesn’t generate any income through dividends or interest payments. This means a portfolio with too much gold gives up the growth potential of stocks and the income from bonds.

The Bottom Line

While some investors worry about the weakening dollar and rising gold prices, it’s important to view gold as just one part of a well-balanced portfolio that aligns with your long-term financial goals.

Unsure of the gold exposure in your portfolio? Connect with us today to discuss how we allocate to gold and other commodities as part of our overall investment allocation.

Please consult with your financial advisor and/or tax professional to determine the suitability of these strategies. All views, expressions, and opinions in this communication are subject to change. This communication is not an offer or solicitation to buy, hold, or sell any financial instrument or investment advisory services.

Understanding Key Real Estate Investment Terms

Real estate investments can be an excellent way to build wealth, but the language of real estate investing often feels like alphabet soup—cap rate, IRR, equity multiples, cash yield. For new and even experienced investors, these terms can be confusing. Having a firm grasp of the fundamentals will help you evaluate opportunities more clearly and make informed decisions.

Below, we’ll break down some of the most important real estate investment terms you’re likely to encounter.

Cap Rate (Capitalization Rate)

The cap rate measures the expected annual return from a property, assuming it was purchased in cash (without debt).

• Formula: Net Operating Income (NOI) ÷ Purchase Price
• Example: If a property generates $100,000 in NOI and is purchased for $1,250,000, the cap rate is 8%.
• Use: A quick way to compare properties or assess if the income stream justifies the price.

IRR (Internal Rate of Return)

The IRR represents the annualized return an investor expects to earn over the life of an investment, taking into account both cash flow and eventual sale proceeds.

• Why It Matters: Unlike the cap rate, IRR considers the time value of money—a dollar today is worth more than a dollar tomorrow.
• Use: Helpful when comparing investment opportunities with different hold periods and cash flow patterns.

Net Return

This is the profit remaining after all expenses, fees, and taxes have been deducted.

• Why It Matters: Gross returns can be misleading if fees and costs aren’t factored in. Net return shows what actually ends up in your pocket.

Cash Yield (Cash-on-Cash Return)

Cash yield measures the annual cash income relative to the cash you invested upfront.

• Formula: Annual Pre-Tax Cash Flow ÷ Initial Cash Invested
• Example: If you invest $200,000 and receive $20,000 in annual cash distributions, your cash yield is 10%.
• Use: Ideal for income-focused investors seeking to understand the annual cash flow generated by their investment.

Equity Multiple

The equity multiple tells you how much total cash you’ve received compared to what you invested.

• Formula: Total Cash Distributions ÷ Total Equity Invested
• Example: A $100,000 investment that returns $200,000 over its life has a 2.0x equity multiple.
• Use: A simple measure of total return—did you double your money or fall short?

Other Key Terms to Know

• NOI (Net Operating Income): Income after operating expenses, but before financing costs.
• Debt Service Coverage Ratio (DSCR): NOI ÷ Debt Payments; measures a property’s ability to cover its loan obligations.
• LTV (Loan-to-Value): Loan Amount ÷ Property Value; a lender’s measure of risk.
• Exit Strategy: How and when the investor or fund plans to sell or refinance the property.

Real Estate Ownership Options

When considering real estate, you’re not limited to buying physical properties. You can also invest through Real Estate Investment Trusts (REITs) or other pooled investment vehicles.

Key Takeaways on Taxes

• Direct Ownership: The most flexible for tax planning, especially with depreciation and 1031 exchanges to defer capital gains.
• REITs: Dividends are generally taxed at ordinary income rates, though the 20% QBI deduction (for qualified REIT dividends) can soften the blow. There are no depreciation deductions for individual investors.
• Private Funds/Syndications: Investors may receive pass-through tax benefits such as depreciation and expense deductions (reported on a K-1), which can shelter some income. However, you typically can’t control when gains are realized.

Bringing It All Together

Each path into real estate has unique strengths. If you want hands-on control and direct tax advantages, owning property may be right for you. If you value liquidity and diversification, REITs offer stock-like convenience. Private funds and syndications offer access to institutional-level deals but require patience and trust.

The most successful investors look beyond just the numbers. They evaluate their goals, time horizon, and tolerance for hands-on management before deciding whether to buy a property outright, invest in a REIT, or explore other vehicles.

Real estate investing can be complex, but with the proper knowledge, you’ll have the tools to evaluate opportunities like a pro. If you need assistance navigating these topics, connect with us today to discuss real estate investment strategies.

Please consult with your financial advisor and/or tax professional to determine the suitability of these strategies. All views, expressions, and opinions in this communication are subject to change. This communication is not an offer or solicitation to buy, hold, or sell any financial instrument or investment advisory services.

Health care costs continue to rise with no signs of slowing down. This makes health care one of the most significant expenses you’ll face in retirement. A person retiring at age 65 today may spend approximately $165,000 on healthcare during retirement. For married couples, that number almost doubles. Since people are living longer, planning for these costs is a key part of any sound financial plan.

There are various ways to prepare for future healthcare costs. These include special savings accounts with tax benefits, additional insurance to help cover Medicare gaps, long-term care insurance, and strategic retirement income planning. Each approach has advantages depending on your health, financial situation, and when you plan to retire. Using several of these strategies together often provides the best protection against rising healthcare costs.

Health Savings Accounts (HSAs) are especially useful, yet they remain underutilized. Since 2004, HSAs have evolved from being relatively unknown to becoming one of the most effective tax-saving tools available. You only qualify for an HSA if you have a high-deductible health plan.  If used strategically, they can significantly help both your current taxes and long-term financial security.

 

Health care costs keep rising at a fast pace

Health care spending in the United States has grown dramatically over recent decades. In 2023, the country spent $4.9 trillion on healthcare – approximately $12,297 per person. This equals nearly 18% of the country’s total economic output and represents a significant increase from the 5% reported in 1962!

Several factors contribute to this steady growth, including an aging population, an increase in chronic diseases, advancements in medical technology, expanded insurance coverage, and general healthcare inflation.

What planning strategies can help combat these rising prices?  Consider three main areas:

• Tax planning: Find ways to pay for health care expenses using tax-advantaged accounts like HSAs
• Retirement planning: Understand your future health care needs and find the best ways to fund them
• Estate planning: Understand how accounts like HSAs will be handled if you don’t use all the money

 

HSAs offer significant tax benefits with growing contribution limits

HSAs are available to people with high-deductible health plans. For 2026, this means plans with minimum deductibles of $1,700 for individuals or $3,400 for families.

HSAs are special because they offer three tax advantages – something not provided by any other account type:

1. Tax-deductible contributions: Money you put in reduces your taxable income
2. Tax-deferred growth: Earnings in the account grow without being taxed
3. Tax-free withdrawals: Money taken out for qualified medical expenses is never taxed

For 2026, you can contribute up to $4,400 for individual coverage and $8,750 for family coverage. If you’re 55 or older, you can make an additional $1,000 catch-up contribution.

 

Health care costs are highest in retirement

One smart HSA strategy is to treat it like a special retirement account solely for healthcare costs. This means putting in the maximum amount each year while paying current medical bills from your regular checking account. Keep receipts for medical expenses you pay out-of-pocket – you can get reimbursed from your HSA years later with no time limit.

The key is investing your HSA for long-term growth, allowing the funds to grow tax-free over time. Unlike other retirement accounts, HSAs don’t require you to take money out at a certain age. After age 65, HSAs become even more flexible – you can take money out for non-medical expenses without a penalty (though you’ll pay regular income tax).

For estate planning, if your spouse inherits your HSA, they can use it as their own with all the tax benefits. For other beneficiaries, such as children, the tax treatment is less favorable and can result in a significant tax bill.

Bottom line

Rising healthcare costs present a significant planning challenge, but HSAs offer unmatched tax advantages for one of life’s largest expenses. If you’re eligible, HSAs are a valuable addition to your financial plan.

If you need assistance navigating these costs, connect with us today to model different scenarios in your plan.

Please consult with your financial advisor and/or tax professional to determine the suitability of these strategies. All views, expressions, and opinions in this communication are subject to change. This communication is not an offer or solicitation to buy, hold, or sell any financial instrument or investment advisory services.

One Big Beautiful Bill Act: What You Need to Know

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (OBBBA), a comprehensive tax and spending package that reshapes numerous areas of U.S. fiscal policy. Here, we break down key items that clients and taxpayers should understand.

Individual Tax Rates & Standard Deduction

• The 2017 Trump-era tax brackets, including the 37% top rate, are now permanent.
• The standard deduction remains elevated, effective for tax years beginning in 2025.

Child & Senior Deductions

• The Child Tax Credit increases to $2.2K (from $2K), indexed for inflation.
• Seniors (65 and older) qualify for a $6K deduction ($12K for married couples), which phases out above income thresholds, through 2028.

SALT Deduction Relief

• The SALT cap increases from $10K to $40K for tax years 2025–2029 (indexed ~1% annually), then reverts.
• This applies to taxpayers with AGI ≤ $500K and phases down for higher-income earners.

Itemized Deductions & Limits

• High earners in the 37% bracket receive a reduced itemized deduction value capped at 35% of income.
• Charitable deductions are now subject to a 0.5% AGI floor
• Educators can claim qualifying expenses if they itemize their deductions.

New “Below-the-Line” Deductions

These one-time provisions expire in 2025–2028:

• Up to a $25K deduction for tips, subject to strict conditions. Phaseouts start at $150K for single filers and $300K for joint filers.
• Up to a $25K deduction for joint filers and $12.5K for all other filers for overtime. The deduction applies to the amount of overtime compensation paid above an employee’s regular rate.
• Auto loan interest deduction for U.S.-assembled vehicles can reach $10K. Phaseouts occur at $100K for single filers and $200K for joint filers.

“Trump Accounts” for Children

• New tax-advantaged IRA-like accounts receive:
  • $1K seed deposit per child born in 2025–2028.
  • Parents can contribute up to $5K annually starting in 2026; these accounts are limited to funds that track a qualified index, defined as the S&P 500 or any index composed primarily of U.S. equities.

QBI Deduction (Section 199A)

• The 20% pass-through deduction is now permanent.
• Phaseout thresholds widen in 2026 for business owners.
• A new minimum deduction of $400 applies if at least $1K in active QBI is from non-specified service trades or businesses.

Energy Credits Rollback

OBBBA eliminates key clean-energy tax incentives set by the IRA, including:

• The clean vehicle credit (up to $7.5K for new EVs; $4K for used) expires September 30, 2025.
• Energy Efficient Home Improvement Credit of up to $1.2K for energy-efficiency improvements (e.g., windows, doors, insulation, or heating and cooling equipment, and home energy audits) ends on December 31, 2025.
• Alternative Fuel Vehicle Refueling Property Credit of up to $1K for electric vehicle charging equipment installed at a taxpayer’s residence, expires June 30, 2026.
• The Residential Clean Energy Credit, which allows up to 30% of the cost of purchasing or installing solar panels, wind power, geothermal heat pumps, or fuel cell equipment, expires December 31, 2025, regardless of when the property is placed in service.

Other Provisions Overview

• Alternative Minimum Tax (AMT): reduced exemption phaseouts.
• 529 Plan and 529A ABLE account expansion.
• Qualified Opportunity Zone and small business stock gain exclusions remain in effect.
• Bonus Depreciation of Business Property: permanently restored 100% bonus depreciation for business property placed in service after January 19, 2025.
• Section 179 Deduction Limits are increased.
• The Reporting Limits for Business Payments increase the threshold of $600 to $2,000, adjusted for inflation, starting in 2026.
• U.S. Research Expenses permanently allows 100% expensing of research and experimental costs incurred for research in the U.S; this can be applied retroactively.
• Gains on Qualified Farmland Sale allow a gain from the sale of qualified farmland to be spread over four annual installments if it is sold to a “qualified farmer” (i.e., not a developer).
• Expanded Eligibility For HSA Contributions now includes “Bronze” and “Catastrophic” plans, which previously did not meet the minimum deductible and max out-of-pocket requirements. Additionally, individuals can maintain HSA eligibility while covered by a direct primary care arrangement.

Bottom Line

The OBBBA redefines the American tax landscape, locking in many Trump-era tax cuts, adding family- and senior-centric benefits, and boosting planning complexity. While it offers meaningful opportunities (especially for tip earners, business owners, and residents of high-tax states), its temporary provisions require timely action and professional strategy. The key now is strategic implementation before 2029 and positioning for what comes next. For more information on the items noted here, please refer to Michael Kitces’, industry expert, Nerd’s Eye View blog post here.

If you need help navigating this new legislation, connect with us today to understand how the One Big Beautiful Bill Act applies to you.

Please consult with your financial advisor and/or tax professional to determine the suitability of these strategies. All views, expressions, and opinions in this communication are subject to change. This communication is not an offer or solicitation to buy, hold, or sell any financial instrument or investment advisory services.

The Real Cost of Debt

When most people evaluate debt, they fixate on the interest rate. But as Morgan Housel argues in “How I Think About Debt” (Collaborative Fund, April 30, 2024), debt affects much more than your wallet—it narrows the range of life outcomes you can endure. Let’s think beyond interest rates and how paying off your debt may have unexpected benefits.

Reduced Resilience in a Volatile World

Morgan’s core idea: more debt means a tighter buffer. Without debt, you can absorb shocks like job loss, health emergencies, or market downturns. As debt rises, your margin for error shrinks; many life events that once felt survivable become existential risks.

Flexibility & Optionality

Debt is a liability that limits choices. Can you pivot careers? Do you need to move to be closer to family? What about starting a business? Heavy debt narrows these options. The freedom to navigate life’s unpredictable turns often hinges on financial flexibility, which is something debt undermines.

Psychological Burden

Debt brings emotional stress. The dread of missed payments, the constant mental tally of balances, and the guilt all weigh heavily on mental well-being. That stress isn’t trivial; it drains energy, cultivates anxiety, and limits psychological bandwidth.

Life-Event Vulnerability

Morgan highlights more than financial volatility: psychological, family, child, health, and political volatility can all hit unexpectedly.

• Health crisis? Medical debt combined with your existing obligations can create a perfect storm.
• Family emergencies or divorce? These can upend income and emotional reserves.
• Job loss or career “burnout”? Heavy debt can force you to accept bad options out of desperation.

Paying off debt creates breathing room when life throws curveballs.

Debt as a Tool

Morgan isn’t anti-debt. It can be a valuable tool if used strategically for education, your home, or a business. But debt becomes dangerous when it strips away flexibility, increases stress, or limits your ability to recover from life’s inevitable blows.

Questions to Ask Yourself

• Survival Range: “How much shock can I withstand—job loss, health issues, market dips?”
• Life Goals: “Will debt limit my ability to switch careers, relocate, or invest in family?”
• Emotional Load: “Does managing debt cost me mental energy, sleep, or peace of mind?”
• Event Preparedness: “Am I ready for unexpected events without being crushed?”
• Alternatives: “Could I have funded this in another way—saved a little longer or used a less costly option?”

Steps to Take Now

1. Audit your debt. List balances, interest rates, payment terms, and the emotional impact.
2. Define your risk tolerance. How much leverage feels comfortable when life gets messy?
3. Set balanced goals. Prioritize high-interest debt, but don’t ignore the mental benefit of small wins.
4. Build a buffer. Even a modest emergency fund can reduce pressure and buy time when needed.
5. Review regularly. Life changes fast! Marriage, kids, relocation, and job changes all shift your healthy debt level.

Final Word

Interest isn’t the only cost of debt: lost flexibility, emotional strain, and reduced capacity to handle life’s shocks are often bigger. Morgan Housel reminds us that debt narrows the range of outcomes we can endure. So the true goal isn’t just paying off your debt, but rather it’s buying optionality, peace of mind, and resilience.

If you need help navigating your debt considerations, connect with us today to create a personalized debt payoff strategy.

Please consult with your financial advisor and/or tax professional to determine the suitability of these strategies. All views, expressions, and opinions in this communication are subject to change. This communication is not an offer or solicitation to buy, hold, or sell any financial instrument or investment advisory services.

5 Financial Mistakes People Make in Their 40s (And How to Avoid Them)

Your 40s are a financial crossroads. You may be earning your highest salary yet, but you’re likely juggling big expenses, including kids, mortgages, aging parents, and more. It’s easy to get caught up in the day-to-day and overlook your long-term financial health.

Here are the top 5 financial mistakes we see people make in their 40s, and what you can do to avoid them.

Delaying Retirement Savings (Still)

If retirement planning hasn’t been a priority, now’s the time to get serious. Many working professionals in their 40s are still not contributing enough to retirement accounts.

Our tip: If you’re behind on your 401(k) and IRA contributions, don’t panic, but do act now. Use compound interest to your advantage by starting now, and remember that catch-up contributions kick in at age 50.

Prioritizing Kids’ College Over Retirement

It’s noble to want to help your kids avoid student debt. But doing so at the expense of your own retirement can backfire.

Our tip: Remember, you can borrow for education, but not for retirement. If you’re actively saving for retirement and have cash flow to put towards education, prioritize 529 plans or other tax-advantaged savings vehicles that don’t derail your long-term security.

Letting Lifestyle Creep Take Over

As income grows, so do the temptations: a bigger house, a nicer car, luxury vacations. This lifestyle inflation can quietly erode your financial future.

Our tip: Be intentional about spending increases and ask yourself whether new expenses align with your financial goals.

Ignoring Debt Strategy

Credit cards, student loans, and even your mortgage can be manageable, or they can snowball. Without a strategy, you may end up carrying unnecessary interest for years.

Our tip: Create a plan to aggressively tackle high-interest debt first. Consider refinancing, consolidating, or using windfalls to pay down balances faster.

Skipping Insurance and Estate Planning

Many people overlook life insurance, disability insurance, and estate planning, especially if they feel “too young” to consider it.

Our tip: Ensure you have adequate coverage to protect your family in the event of an unexpected occurrence. Draft or update your will, and ensure all beneficiary information is current. If your children are too young to inherit funds or you want to minimize the burden of asset distribution on your heirs, create a trust.

Final Thoughts: Take Control in Your 40s

The good news? You still have time to course-correct. But the intentionality starts now. The choices you make in your 40s will define your financial stability in your 50s, 60s, and beyond. Avoiding these 5 financial mistakes can make all the difference.

If you need help navigating your financial future, connect with us today to build a strategy tailored to your goals and lifestyle.

Please consult with your financial advisor and/or tax professional to determine the suitability of these strategies. All views, expressions, and opinions in this communication are subject to change. This communication is not an offer or solicitation to buy, hold, or sell any financial instrument or investment advisory services.

Your Time Portfolio: How to Diversify Your Days to Actually Feel Free

In personal finance, we’re told to build diversified investment portfolios to protect against risk and maximize return. But there’s another portfolio we should be managing with the same level of care: our time.

It’s not just about getting rich or “hitting your number.” It’s about how we spend our hours, how we build our days, and whether we feel free, not just financially, but also psychologically.

An uncomfortable truth is that financial freedom means nothing if we still feel trapped.

The Illusion of Freedom

We’re not just working for money—we’re working for identity, validation, and a sense of purpose. And when the job ends, we’re often left staring at a blank canvas, unsure of what to do next.

The Real Prison Isn’t Material—It’s Mental

Most people chase material independence: enough money to never have to work again. But the harder battle is for psychological independence: feeling free, regardless of what’s in your bank account.

True independence isn’t about stepping away from a paycheck. It’s about stepping away from fear, obligation, and the internal pressure to prove yourself through external achievement. It’s the freedom to choose what to do with your time—and to feel confident in that choice.

And that’s where the idea of a diversified time portfolio comes in.

How To Build a Diversified Time Portfolio

Imagine managing your time as an investment advisor manages your assets. The goal? Resilience, fulfillment, and long-term well-being.

• Core Time (Bonds): Stability and Structure
  • This is the work that keeps the lights on. It may not light you up inside, but it provides security. The key is to right-size this portion so it doesn’t dominate the entire portfolio.

• Creative and Purpose Projects (Growth Stocks): Identity and Joy
  • These are your “bets” on the future. They might be risky, uncertain, or unpaid, but they give you a sense of progress and meaning. Whether it’s art, music, writing, or starting a side hustle, this is where your authentic self often lives.

• Rest and Recovery (Cash Reserves): Energy and Resilience
  • Downtime isn’t laziness—it’s fuel. Like cash in your financial portfolio, rest ensures you can weather storms and respond to opportunities.

• Relationships and Community (Value Stocks): Compounding Value
  • Your social life is an investment with massive long-term dividends. Prioritize the people who energize you and create space for connection.

• Exploration and Learning (Speculative Assets): Growth and Curiosity
  • Try something new and experiment. Learn a skill with no agenda. These are your wildcard investments—often unpredictable, sometimes life-changing.

How would you consider building this? Just like an investment portfolio! For example, Relationships 40%, Joy 35%, Stability 10%, Resilience 10%, Curiosity 5%.

Beyond the Escape: What Happens After You’re Free?

Here’s the twist: freedom isn’t a finish line, even with a well-built time portfolio. It’s a milestone. Many people feel unmoored after escaping their job, commute, or their daily grind. The “second hero’s journey” begins—not to slay the dragon, but to figure out who you are without the dragon to fight.

Some practical ways to navigate this:

• Create a purpose project: Not a startup, not a world-changing crusade—just something small and meaningful. Something that reminds you you’re alive.
• Diversify your identity: Don’t tie your self-worth to work, productivity, or status. Build multiple layers of identity—artist, friend, mentor, explorer, you fill in the blank!
• Give yourself time to flail: Psychological deprogramming takes time. You won’t feel amazing the day after you leave your 9-to-5 job. That’s normal.
• Say no to the “shoulds”: The expectations, status games, resume-building moves—they’re another prison. Walk away from them.

Real Wealth Is Time Spent Well

We chase freedom, thinking it will fix everything. But freedom is just space. What fills that space is up to you.

So, the question isn’t just “how do you buy your time back,” but rather, “how do you invest it once you have it?”

Don’t wait until retirement to start living with intention. Build a diversified time portfolio that reflects who you are, not just what you do.

Money comes and goes. Time only goes.

Treat it like the precious, limited asset it is. Diversify it wisely. Guard it fiercely. And remember: the goal isn’t to optimize every minute but to align more of your hours with what makes you feel fully alive.

By building a balanced, diversified time portfolio, you’re not just managing your schedule—you’re designing a life.

Connect with us if this topic is overwhelming to navigate on your own!

Please consult with your financial advisor and/or tax professional to determine the suitability of these strategies. All views, expressions, and opinions in this communication are subject to change. This communication is not an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services.